The government has raised excise duty on cigarettes and liquors, but kept excise duty on automobiles unchanged.
The budget for Fiscal Year 2014/15, which Finance Minister Dr Ram Sharan Mahat unveiled on Sunday, raised excise duty on cigarettes and cigars by Rs 500 per 1,000 sticks. According to the new rate, traders will have to pay excise duty of Rs 3,500 per 1,000 sticks of cigarette or cigar from the new fiscal year.
“Though the government has been increasing excise duty on tobacco products annually to discourage their consumption, it affects traders and manufacturers,” Ravi KC, vice president of Surya Nepal, told Republica. “Though the hike in excise duty is nominal, the industry is sure to see impact in the long run.”
Surya Nepal is the leading cigarette manufacturers in the country.
Likewise, the government has increased excise duty on 50 UP liquor by 49 percent to Rs 250 per LP liter. Earlier, the government was levying Rs 168 per LP liter as excise duty.
“Though there have been nominal changes in excise duty on 25 UP, 40 UP and 75 UP liquors, excise duty on 50 UP liquor – the demand of which is high — has been increased by 49 percent,” Min Prasad Bhusal, chairman of Rainbow Distillery, said. According to Bhusal, hike in excise duty will directly affect small manufacturers.
“Liquors of 50 UP strength are mainly consumed by middle-class and lower-class people as they are comparatively cheaper,” Bhusal said, adding that small manufacturers will face big problems once price of this segment of alcohol is raised. He further said that excise duty hike would directly impact around 40 local manufacturers.